Gold prices are likely to react quickly to US President Donald Trump’s meeting with Ukrainian President Volodymyr Zelenskyy, which is expected to discuss a peace deal with Russia.
Gold prices rose to around $3,350 per ounce on Monday after touching a more than two-week low earlier in the session. Gold is down 1.5% over the last 30 days but has gained over 33% in the last 12 months.
Gold’s safe-haven appeal
Zelenskyy will be joined by key European leaders when he meets with Trump later today. This follows a highly anticipated summit between Trump and Russian President Vladimir Putin last Friday, which failed to yield any breakthrough on a ceasefire, though Putin agreed to allow the US and Europe to provide Ukraine with robust security guarantees as part of an eventual deal to end the war.
Prospects of easing geopolitical tensions will keep the metal’s safe-haven appeal under pressure. “The general mood of the market is maintained by dovish forecasts from the US Federal Reserve and hopes that Trump will remove sanctions on Russia and invest instead. However, if the US-Ukraine negotiations go as badly as they have in the past, risk sentiment may turn negative, which would probably increase the allure of gold as a safe haven,” says Dr. Renisha Chainani, Head – Research at Augmont.
Fed Rates and Gold Price
Meanwhile, investors are awaiting the release of the Federal Reserve’s latest meeting minutes on Wednesday, which could shed further light on the decision to leave interest rates unchanged. Markets will then turn their focus to Fed Chair Jerome Powell’s remarks at the central bank’s annual Jackson Hole symposium later this week for fresh clues on the policy outlook.
To a large extent, interest rates and gold prices are inversely related. The US Fed is expected to cut the rate in the September FOMC meeting, which will be a boost for gold prices. Further, a deteriorating job market points towards tighter economic conditions, leading the US Fed to be more aggressive in cutting rates.
However, improving geopolitical scenario will dent demand for gold, keeping a check on prices.
But, the outcome of the Trump-Zelenskyy face-off and the extent of any peace talks are yet to be determined.
Gold price in the months ahead will continue to be influenced by geopolitics, US economic data related to inflation, jobs and dollar index movement. “The likelihood of further tariffs, a weakening global economy, a relaxation of U.S. monetary policy, and the ongoing decline of the US currency all support gold’s long-term bullish outlook,” adds Dr. Chainani.
Gold price today in India is Rs 99,960, falling below the all-time high price of Rs 1,00,130 reached last month.